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Opinion regarding insurance company considers definition of ‘ever’

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An Indiana Court of Appeals panel was split in an opinion released today that considered the definition of “ever” on a home insurance application when it came to whether the homeowners insurance coverage was ever “declined, cancelled, or non-renewed.”

While the majority opinion found that “ever” should include all insurers who may have cancelled the plaintiffs’ coverage, a dissenting judge wrote that in this case, “ever” should have only included the cancellations by the defendant insurance company.

In Allied Property and Casualty Insurance Company v. Linda Good and Randall Good, No. 85A04-0905-CV-240, Linda and Randall Good had a fire March 16, 2003, that destroyed their home and all of its contents.

Only Linda’s name was on the policy she had with the insurance company. The policy was to last one year, beginning July 2, 2002. The insurance company had neither denied nor paid their claims regarding the fire pending an ongoing investigation concerning the fire’s cause. Linda sued March 9, 2004, for breach of contract based on the non-payment of the claim.

Two trials took place. The first trial was in December 2008, which ended in a mistrial. The second trial in January 2009 was bifurcated to address Linda’s breach of contract claim, to address Allied’s third-party claims against Randall that he made false statements about the fire, and to address Allied’s counterclaims against Linda.

Among Allied’s counterclaims were that Linda misrepresented her insurance cancellation history on the application. If the insurance company had known her true cancellation history, Allied claimed, the company would have either denied her coverage or required a higher premium for the coverage.

After hearing the evidence in the January 2009 trial, the court entered a directed verdict for the Goods. The jury awarded slightly more than $1 million in damages to Linda.

However, the Court of Appeals disagreed with the trial court, finding that because Linda acknowledged that at least one and possibly three insurance companies had cancelled policies held by Linda and Randall, she had indeed misrepresented her cancellation history on the application when she claimed she was never denied coverage.

Linda claimed that because the way the form was worded, she interpreted it to mean whether she was ever denied coverage by Allied, and therefore didn’t include her cancellations from other insurance companies.

The Court of Appeals found that this misrepresentation was material in this case.

“A misrepresentation on an application for an insurance policy is ‘material’ if the fact misrepresented, had it been known to the insurer, would have reasonably entered into and influenced the insurer‘s decision whether to issue a policy or to charge a higher premium,” wrote Judge Melissa S. May for the majority.

However, in a footnote the court clarified this definition by adding, “Our opinion … should not, and cannot, be read to encourage, or even permit, parties to comb through insurance applications in hopes of finding any false statement in an effort to reduce premiums or avoid paying benefits. Only a ‘material’ false representation could permit either result.”

Because of these findings, Judge May wrote, “the trial court erred by denying Allied’s motion for summary judgment. We reverse and remand for entry of judgment for Allied on all counts.”

However, while Judge Michael P. Barnes concurred, Judge L. Mark Bailey wrote a 9-page dissent.

Including an image of the application field in question, he wrote the application field about past insurance cancellations was unclear as to whether “ever” included all insurance companies or just Allied.

“Taking ‘ever’ out of its context seems to me to disregard how a reasonable person could construe the question,” he wrote. “Reading the form as presented above, a reasonable person could indeed interpret the item about prior cancellations as pertaining to the current insurer – particularly since the section heading is ‘INSURANCE COVERAGE,’ not ‘Prior Insurance Coverage,’ ‘Coverage History,’ or the like.”
 

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  1. So that none are misinformed by my posting wihtout a non de plume here, please allow me to state that I am NOT an Indiana licensed attorney, although I am an Indiana resident approved to practice law and represent clients in Indiana's fed court of Nth Dist and before the 7th circuit. I remain licensed in KS, since 1996, no discipline. This must be clarified since the IN court records will reveal that I did sit for and pass the Indiana bar last February. Yet be not confused by the fact that I was so allowed to be tested .... I am not, to be clear in the service of my duty to be absolutely candid about this, I AM NOT a member of the Indiana bar, and might never be so licensed given my unrepented from errors of thought documented in this opinion, at fn2, which likely supports Mr Smith's initial post in this thread: http://caselaw.findlaw.com/us-7th-circuit/1592921.html

  2. When I served the State of Kansas as Deputy AG over Consumer Protection & Antitrust for four years, supervising 20 special agents and assistant attorneys general (back before the IBLE denied me the right to practice law in Indiana for not having the right stuff and pretty much crushed my legal career) we had a saying around the office: Resist the lure of the ring!!! It was a take off on Tolkiem, the idea that absolute power (I signed investigative subpoenas as a judge would in many other contexts, no need to show probable cause)could corrupt absolutely. We feared that we would overreach constitutional limits if not reminded, over and over, to be mindful to not do so. Our approach in so challenging one another was Madisonian, as the following quotes from the Father of our Constitution reveal: The essence of Government is power; and power, lodged as it must be in human hands, will ever be liable to abuse. We are right to take alarm at the first experiment upon our liberties. I believe there are more instances of the abridgement of freedom of the people by gradual and silent encroachments by those in power than by violent and sudden usurpations. Liberty may be endangered by the abuse of liberty, but also by the abuse of power. All men having power ought to be mistrusted. -- James Madison, Federalist Papers and other sources: http://www.constitution.org/jm/jm_quotes.htm RESIST THE LURE OF THE RING ALL YE WITH POLITICAL OR JUDICIAL POWER!

  3. My dear Mr Smith, I respect your opinions and much enjoy your posts here. We do differ on our view of the benefits and viability of the American Experiment in Ordered Liberty. While I do agree that it could be better, and that your points in criticism are well taken, Utopia does indeed mean nowhere. I think Madison, Jefferson, Adams and company got it about as good as it gets in a fallen post-Enlightenment social order. That said, a constitution only protects the citizens if it is followed. We currently have a bevy of public officials and judicial agents who believe that their subjectivism, their personal ideology, their elitist fears and concerns and cause celebs trump the constitutions of our forefathers. This is most troubling. More to follow in the next post on that subject.

  4. Yep I am not Bryan Brown. Bryan you appear to be a bigger believer in the Constitution than I am. Were I still a big believer then I might be using my real name like you. Personally, I am no longer a fan of secularism. I favor the confessional state. In religious mattes, it seems to me that social diversity is chaos and conflict, while uniformity is order and peace.... secularism has been imposed by America on other nations now by force and that has not exactly worked out very well.... I think the American historical experiment with disestablishmentarianism is withering on the vine before our eyes..... Since I do not know if that is OK for an officially licensed lawyer to say, I keep the nom de plume.

  5. I am compelled to announce that I am not posting under any Smith monikers here. That said, the post below does have a certain ring to it that sounds familiar to me: http://www.catholicnewworld.com/cnwonline/2014/0907/cardinal.aspx

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